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Weird Marketing Reporting Relationships

Whenever I read about a big company that can’t keep a chief marketing officer, my first question is: Who’s in charge? Because let’s face it. Despite the seemingly proliferating number of chief-something-officers, there still are many more people capable of working at a corporate C-level than there are C-level positions available. This is the fact that falsifies the Peter Principle.

The marketing process is not nearly so well understood as people think it is. Neither is marketing a true profession such that there are generally accepted standards and a license is required to practice. So as a department, marketing can and does end up anywhere on the organization chart.

I myself have been part of some very funky chains of command. As a result, I believe the reporting relationship provides important insights into the status of marketing and by extension the overall health of a given company. Let’s look at some examples.

The CEO

Whatever the title of the top marketing job—CMO or something else—the degree of authority it conveys can be pretty varied. It’s hard to tell from the outside. If CMO tenure tends to be short, it can mean that the CEO is the true head of marketing but, for whatever reason, is having difficulty communicating that expectation pre-hire.

The CEO being in charge of marketing is neither a good thing nor a bad thing by itself. If he’s interested in marketing, solicits opinions about it, is willing to question the status quo, and is reasonably hands-off with execution, why should anyone care if he’s the ultimate decision-maker? It can be a great environment for marketing practitioners anyway.

If the CEO thinks marketing is useless, that’s still not necessarily bad. Often it just means he’ll ignore the marketing team, leaving them to self-manage, which they can do quite capably if the company hires well.

The worst-case scenario is a CEO who thinks marketing is easy. He’s the one who’ll insist on developing market offerings no one wants to buy. He’ll jack up prices and fees overnight and expect customers to simply accept it. He’ll make suppliers and channel partners finance the company by putting them on 90- plus day payment schedules. He’ll increase the frequency of outbound communications till every email gets 500 unsubscribes and every webcast has an audience of two.

And who will insist on buying online banner ads and million-dollar golf pro sponsorships while serving up cold bagels and a toaster at client events? Yep. This guy.

Sales

A lot of times, marketing reports in to a VP of sales and marketing, or even just a VP of sales. What it means either way is that sales is in charge.

This is never good. More than likely all of the following is going on:

1. What the company considers marketing is really only promotions. The other parts of the marketing mix live elsewhere, fragmenting the go-to-market strategy.
2. Marketing spends the bulk of its time on tactical lead generation, an activity that is necessary but insufficient to sustain revenue.
3. Marketing is rewarded for ROI. As a result, the organization pursues only those initiatives where responses are readily observable.
4. Marketing and sales are engaged in a pointless, ongoing tug-of-war over credit for sourcing sales opportunities.

Sales and marketing are part of the same business process. But that doesn’t make it a good idea to organize them together. Personal selling, digital marketing, field marketing, and so forth each require different skill sets and, at the functional level, should not be evaluated against the same objectives.

Corporate Communications

I’ve seen this once or twice. Someone decides marketing is all about marketing communications, and from there proceeds to conclude marketing communications is the same as communications generically.

Marcom and corporate communications do overlap. For example, usually the marketing team is responsible for the company website because it’s a key means of communicating to customers, distributors, marketing partners, and suppliers. But the website also serves groups whose interests extend beyond acquiring the company’s commercial offerings, such as investors, journalists, potential employees, and the general public. So corporate communications needs the website too.

But subordinating one function to the other is a poor way to address an overlap. For one thing, it fragments the marketing process just as much as if marketing reported to sales. It also ends up muddying the marketing mission, especially when a company is culturally very insular (as many are). That’s how firms end up burning vast amounts of staff time on “internal marketing,” which is really just employee communications that may or may not have anything directly to do with marketing.

Products

I was once in this situation, where all of marketing reported to the senior vice president of products. It wasn’t awful. Of course, here too the balance was out of whack—90 percent of everyone’s work involved rolling out new products and product extensions—but at least at the product level we invoked all elements of the marketing mix.

This arrangement shares one drawback with marketing reporting to corporate communications, which is that it doesn’t control for companies’ tendency to focus inward. Product groups as a general rule pay a great deal of attention to features, technical specifications, and benefits (of the features or specs). Incremental differences between products are also important. However, they pay relatively little attention to customer business outcomes.

Related to this, in B2B technology, product groups consider professional services an ancillary, follow-on business similar to technical support. The reward system doesn’t encourage marketing to cultivate management consulting opportunities that are enabled by the company’s technology. This is becoming an increasingly serious issue as the market turns away from software licensing and enterprise solutions in favor of lower-margin subscription services and departmental solutions.

The CIO

I actually knew of a situation like this, sort of. Senior management decided to assign a marketing person to every functional head. In this role, the staff member was called a “lead client marketer,” the idea being that the functional head was an internal client of the marketing team. Most of the so-called internal clients were in charge of P&L business units. But one client was the CIO.

Apart from the general illogic of making a shared service out of non-routine work, it was entirely unclear how marketing was supposed to commercialize something that was strictly a back-office function. The decision-makers didn’t explain, meaning they were clueless as well. My guess is that it was simply part of the swag bag of C-level perks, along with the window office and assigned parking space.

I don’t know what became of it all. I like to think that the CIO and the LCM together found the humor in the situation and became good friends.

The CFO

Send marketing to live under the CFO? That’s a situation so weird even I haven’t seen it. However, it’s what one famous company did recently. It got quite a lot of media coverage.

A CFO is the steward of the company’s financial affairs. Putting the CFO in charge of a function that has revenue goals creates an obvious and non-trivial independence issue. I’m surprised that company’s audit committee tolerates the situation. Where’s the governance?

The Matrix

In a matrix environment, marketing is centralized at the corporate level. The marketer has a direct boss inside the marketing organization and one or more indirect bosses in the lines of business. It’s a formal arrangement as opposed to an informal one like being on a project team.

Matrix management by itself tells you a lot about the organization where it exists. It means there are resourcing issues that no one has the will or authority to address. Instead responsibility is punted to marketing, where folks are expected to serve different masters somehow.

It’s a plan, but not a good one. One boss may very well encourage you to follow good marketing practices and do what’s best for the overall business. But if that’s not what the other boss wants, you’re in a major pickle. As a discipline, matrix management offers no realistic controls to prevent this sort of thing from happening and when it does, the resulting distraction completely negates whatever efficiencies the matrix might possibly offer.

Marketing is the window to the company culture much as eyes are windows to the soul. Okay, maybe that’s a little too precious. But if you’re trying to understand what it’s like inside a company, and where some of the strengths and vulnerabilities of the business might be, the marketing reporting relationship can offer pretty decent insight.